What is capacity to act?

Capacity to act is the ability to commit resources to move a new venture from being a learning experiment into a revenue generating business. Faced with a decision to commit resources to a radical innovation or to sustaining today’s business, some leaders freeze. They stand at the precipice but do not act. Acknowledging this competing commitment is step one in the process of managing it to enable core and explore to prosper.

Why is having the capacity to act important for companies to innovate?

Having the capacity to act is important because there is very little at risk in the early stages of an innovation venture as it is requires relatively low levels of investment. If, however, you want to step up to the hard choice of committing resources to new ventures and confront the fear and inertia in the organization that holds them back, then leaders need to learn how to develop a capacity to act. This is the secret sauce that differentiates innovation theatre from actually building new and disruptive businesses..

How Can Leaders Find the Capacity to Act?

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How can leaders find the capacity to act?

Leaders can find the capacity to act by accepting that they have competing commitments, one to innovation and the other to sustaining current business performance. When leaders recognize this competition they can then identify how to manage it in a way that allows them to meet both commitments. There are resources available to help with this, such as Both/And Thinking by Wendy Smith and Marianne Lewis and The Real Reason People Don’t Change by Bob Kegan and Lisa Laskow Lahey.

How can a company provide leaders the capacity to act?

Companies can empower leaders to have the capacity to act by adopting an approach to building new ventures that uses business experiments to de-risk investments through carefully structured, low-fidelity customer trials.

Capacity to Act: What Really Stops Companies from Innovating

Read More: Capacity to Act: What Really Stops Companies from Innovating

What are some of the main barriers to having the capacity to act?

There are three main barriers to having a capacity to act, first, is the inherent uncertainty of innovation outcomes; second, is risk aversion, which is a psychological characteristic of most humans that causes them to prefer to protect what they have and maximize for short-term outcomes over long; third, is the hidden nature of the competition between a commitment to innovation and that to the existing business, many leaders deny the competition and blame some failure in the innovation project for their decision not to make an investment.

Why is creating the capacity to act important for creating a culture of innovation within a company?

Nurturing the capacity to act is important because it is demoralizing for employees when a company backs away from innovation, as it confirms assumptions about a short-term focus, risk aversion, and concern for the judgment of the financial markets. This creates a negative spiral that discourages managers and employees from proposing new ideas in the future.

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